How to calculate the number of trading days per year
Since you have posed the question question of how many trading days in a year, let me first provide you an answer. On average there are ~ 251 days per year. This calculation is broken down into the following inputs:
# of Days in the Year - # of Weekends - # of Half Trading Days - # of Holidays = Total Trading Days per Year
Based on this formula let’s look at the number of trading days for 2014.
Number of Trading Days in 2014
365 (number of days in 2014) – 104 (number of weekend days in 2014) – 9 (public holidays) = 252 days.
What most people forget to factor in are the days where the market closes at 1pm. In 2014 those dates are July 3, 2014 (day before July 4th), November 28, 2014 (day after Thanksgiving) and December 24, 2014 (day before Christmas). Once you factor in these three half-day sessions, you lose an additional 9 hours of trading which is equivalent to 1.4 trading days.
So, if you take the previous value of 252 trading days – 1.4 trading days you will have a total of 250.6 or ~ 251 trading days.
While we performed this calculation for 2014, the average of 251 days will be pretty consistent across any year (2015, 2016, 2017, 2018, 2019, 2020, and beyond).
251 days is based on the US market; however, you can use the same calculation for determining the number of trading days in a year for your respective Country (India, UK, Germany, etc.).
How Many Days Can you Actually Trade Per Year?
In this article we will cover how the number of days impacts you as a day trader or active trader. Unlike a normal 9-5 job, you don’t get sick days, vacation, or time off for training when you are an independent trader. If the market is open and you are not trading, then you are not making money.
Vacation (251 Trading Days Remaining)
On average people will take 2 weeks of vacation per year. I know for my European brethren, 10 days off is just the tip of the iceberg, for us in the states it’s the norm. If you factor this into the calculation there is a loss of another 10 trading days.
Sick Days (241 Trading Days Remaining)
Now enters the variable of sick days. At work, I know we all may fall ill on the unseasonably warm Friday in late February, but again when you are trading on your own, each day counts. Assuming you take your Vitamin Cs religiously and avoid large public places in the winter, I think it’s safe to say you will take about 3 sick days per year.
Now, if you are like me and you have kids, then you need to up this figure to ~ 10 days. While you can try trading with a sick kid at home, I don’t recommend it as your attention will likely be diverted with doctor’s appointments, medicine schedule and just general worry.
So, we’ll reduce the number of trading days by another 10 (if you don’t have kids you can use the standard 3 days).
Trading Slumps (231 Trading Days Remaining)
I don’t care how good you think you are, there will be some rough trading days along the way. These dark days will sneak up on you and out of nowhere it will be as if you can’t find a winning trade anywhere.
Some traders will just plow through this rough period and keep trading, but experience has shown me over the years this is a more costly approach.
Another option is to outright stop trading, which makes sense if you don’t let your ego get bruised so much you can get back on the horse.
What I have found to be the sweet spot is to continue trading through my slumps but use far less money and reduce the frequency of my trading. This allows me to regain my focus and reduce the noise of worrying about losing money or the need to be right.
On average you will lose about 1 day a quarter for these rough spots. So, we’ll need to reduce another 4 trading days for this as well.
Life Happens (227 Trading Days Remaining)
We have all been there; you have a plan for how your day is going to go and things go crazy. Your HVAC unit goes out, or your internet connection is awful. Things will just happen. On average expect to lose another 3 days for this as well.
The market has nothing to offer (224 Trading Days Remaining)
A sign of a good trader is that at times there are no trades available in the market. This may sound strange to newbie traders reading this article since there are thousands of stocks and there has to be something you can trade.
While the supply is always abundant, finding quality trades is another animal. I remember days where the market had no volatility. This lack of enthusiasm often occurs around holidays or after really big moves and the market needs a breather.
You can expect to lose another 7 days from the sheer lack of action over the course of a year.
So what’s left? (217 Days Remaining)
So after all of these reductions you are looking at a total of 217 trading days where you will be able to make money. That means you are losing ~ 14 – 15%% of total available trading days to lack of a better phrase, the cost of doing business.
Swing Traders vs Day Traders
Now if you are swing trading or position trading, the loss of over 30 days or 1.5 months does not make that much of a difference. Reason being, you are buying and holding positions for days or weeks at-a-time. Your earning potential will not be as linear as that of a day trader, but may have a series of spikes up as you take profits on winning trades.
If you are day trading, you have to factor in 1.5 months a year where you will not be trading. The more you dedicate your life to trading, the closer you will land at the 251 trading days in a year. Remember though, it’s not how many days your trade, rather how much money have you made at the end of the year.
I hope you enjoyed this article. Please take a look at tradingsim.com, to see how we can help you improve your trading skills.
Calendar Photo by Joe Lanman
Sick Day Photo by Ryan Hyde
Trading Slump Photo by Lloyd Morgan